>> schieffer: today on "face the nation," it's all about the money. or is it? whatever it's about, the mid- term election will be the most expensive ever. how expensive? $3.7 billion-- that's "billion" with a "b". with nine days to go, both sides have their big guns on the stump. >> i want to have a partner in the united states senate named harry reid. >> schieffer: and the air waves are swamped with television ads. how much impact will all this money flooding the air waves have? we'll talk to one of those who is a key player this year-- karl rove, one-time strategist for george bush, now a key fund- raiser and fox news contributor. and the top strategist and fund- raiser for house democrats, congressman chris von holen of maryland. i'll have a final word about new orleans, the city that is coming

out of a nightmare and showing the rest of us a thing or two. but first, karl rove on "face the nation." captioning sponsored by cbs "face the nation" with cbs news chief washington correspondent bob schieffer. and now from cbs news in washington, bob schieffer. >> schieffer: good morning again. and we welcome to the broadcast this morning, fox news contributor karl rove, who has emerged as one of the key players and fund-raisers in this election, which the center for responsive politics estimates will cost $3.7 billion. mr. rove, thank you for joining us. let me just do a little shorthand here, because if you add up the money raised by the congressional committees and the two national parties, democrats have raised $750 million to the republicans' $500 million.

but when you turn to these so- called outside independent groups, when you add up what they are bringing in, republicans seem to be out- raising democrats about 2 to 1. the two groups that you're associated with alone, expected to raise around $65 million. and a lot of that money is coming from anonymous donors. i want to just start with this. why is the public interest served by flooding our politics with money from people who don't want other people to know they've contributed? >> well, this has been going on for a long while. you left out a big player in this. four unions alone will have, according to their own announcements, spent $220 million in money on elections this year. >> schieffer: we know who they are. >> no, you don't, bob. here's the disclosure report for one who is going to spend $87.5 million. the american federation of state local and community employees. there's their disclosure. that one line right there. they're going to take in

$190,477,829. that's the extent of where you know where it's coming from. so there's a lot of money floating around in politics. >> schieffer: let's get back to my question. why is this in the public interest? >> look, democrats.... >> schieffer: ... to have these anonymous donations. >> i don't remember you having a program when the naacp spent $10 million running ads attacking george w. bush. suddenly, everybody is spun up about it this year when republicans have started to follow what the democrats have been doing and create 501 c-4s, which can use less than their money for express advocacy. you have the feminist majority humane society, legislative they were all vote vets human rights campaign, planned parenthood, league of conservation voters, natural resources defense council, defenders of wildlife and a bunch of others which are all liberal groups that have been using 501 c-4s with undisclosed money for years and years and years and years and spending tens and billions of dollars. it's never been an issue until

the president of the united states on the day when we have a bad economic jobs report, when we lose 95,000 jobs in september and the unemployment rate is 9.6%, the president of the united states goes out and calls conservatives at the chamber of commerce and american crossroads gps, and says these are threats to democracy because they don't disclose their donors. i don't remember him ever saying that all these liberal groups were threats to democracy when they spent money exactly the same way we are. once we copied what the liberals did, liberals got upset. >> schieffer: i want to go back to the original question. i mean, because by your logic, we might as well go back to the days when people just brought cash. >> no, bob, bob, not at all. every one of these donors to those 501 c-4s has to be reported to the i.r.s., and the i.r.s. reviews those reports and if they're foreign donors or other illicit donors, i'm sure the i.r.s. acts on it. it's not the old days when lyndon johnson democrats came in with big bags of money and so forth. let's just be honest. i would like to have a different system, but we have the system we have.

and if liberals do it and nobody complains about it, it strikes me as somewhat hypocritical when conservatives adopt their strategies and follow their models, and conservatives get criticized by the president of the united states by name. i appreciate-- he helped our fund raising. anybody who still wants to contribute can go to our website and contribute. the president of the united states had no problem at all when democrats did this. in 2008, president obama received the benefit of over $400 million of spending by outside groups on his behalf. most of whom did not report a single donor. it was not a threat to democracy when it helped get him elected. >> schieffer: all right. one of the people who did contribute to one of your organizations and whose name was made public was a man named bob perry, i think, the texas home builder. he gave $7 million. what does someone expect for $7 million? >> i can't speak for others, but i know what bob perry expects. that is absolutely nothing. i've known him for 30 years. he's one of the most selfless

individuals i've ever known. i've never received a phone call from bob perry asking for a darned thing. he believes in our country. he's concerned about its future. he gives away most of what he earns to charitable and political and philanthropic causes, and lives a modest lifestyle. it's the kind of person americans should be proud to have. >> schieffer: if we ran a poll around the country, how many people do you think would agree with you when you say that someone would give $7 million to anything and not expect something in return? >> you know, i don't care what the poll might say. i just know the man. the man is a decent, deeply religious patriotic american. god bless him for doing something. >> schieffer: you know, we talked about these outside groups, some of which require disclosure of the money that they get, some of which don't. you're tied to two of them. one.... >> bob perry gave to the 527,

which was disclosed and disclosed all its donors. >> schieffer: mr. rove, back in 2004 in august, you talked to john king of cnn. here's what you said then about these groups. >> i remember well what i said. >> schieffer: let's listen here. >> i'm against it. all the 527 ads and activities. i don't think they're fair. i don't think it's appropriate. they're misusing the law. they all ought to stop. >> schieffer: so why is it, if they were that bad back then, they're so wholesome now. >> i'm not suggesting... it is what it is. the choice is whether you fight the battle with one arm tied behind your back or not. as i say, i wish we had a different system but we got the system we got. think about this, bob. in 2004-- this doesn't count the unions. remember each election we have hundreds of millions of dollars of activity on behalf of the democrats from the unions. $231 million spent by democratic 527s, $116 million for republicans. in 2008, it was $287 million for democratic 527s and $187 million for republican 527s.

i didn't want my party to sit there... and that's the 527s. that doesn't count the 501 c-4s for all of these elections have been virtually all democrat and virtually no republican money through 501 c-4s. >> schieffer: if you feel so strongly about it, would you pledge this morning that you'll work to have new campaign laws where we make all of these contributions transparent and we'll know who is giving them? >> i'm for a new system, bob. i'm focused on 2010. right now, i'm focused on trying to level the playing field. when you have an organization that spends $87 million... it's announced it's spending $87 million. we're the big player but we don't like to boast about it. that's the amount of disclosure. we've tolerated this for decades. the system may need something else. >> schieffer: all right. let me ask you about these private groups. i can't speak for the unions this morning. >> i wouldn't defend them either, bob. >> schieffer: what happens after the election? will you keep these organizations going? >> absolutely. >> schieffer: are they going to have some money there. are they going to continue to be in existence?

will they start running ads against democrats? >> the goal of these groups, look, there's a chairman, there's a board of directors chaired by mike duncan, a former republican national chairman. the executive director is steven long, former general counsel of the u.s. chamber of commerce. and i believe their goal is, yes, to continue it. and to serve as a permanent counterweight to the activities of the labor unions and these liberal groups. >> schieffer: let's talk about the tea party a little bit. rush limbaugh said you feel threatened by the tea party because you and the other establishment folks didn't have anything to do with it. >> no, i welcome it. think it's one of the most positive and whole wholesome developments. he took out of context where i said that the tea party is not sophisticated. my definition is i was using the one about pretentiously or superficially. these are not people who are skilled in the ways of washington. they don't want to be. they're ordinary americans who

have created a massive grassroots effort driven by a sentiment in this country, even more important than the groups is the sentiment that's driving it. that the government is on a terribly dangerous course of spending too much money, running up too much deficit and taking up too much of our... too much control of our lives with things like "obama care." i consider it to be wholesome, patriotic, and incredibly positive for the country. it will drive turnout up this election. four years ago, 82 million people voted in races for the u.s. house of representatives. i would not be surprised to see it be 85,000 or 86,000. i wouldn't drop over if it got to 90 million. and a large amount of that new participation in this year's election is being driven by a vast army of local grassroots organizations, organized around a kitchen table, organized in a community center, organized over a... in a coffee shop of people who want to do something to save america. >> schieffer: i want to get back to that, but i must ask you about something you just said. are you saying, have you come on face the nation this morning and said for the record that rush limbaugh takes things out of

context? >> well, in this instance, he he... may have commented before he saw the entire ver view. he's a friend of mine. he almost more than anybody else is responsible for helping encourage people to educate themselves about the impact of the spending, the deficit and "obama care", so that they have become politically active. he has a vast audience. that audience and others have talked to that audience as well. people have come... think about it. the president of the united states has the biggest bully pulpit in country. he has vast majorities in the senate and the house. yet the health care bill goes from being, as a general concept favored by american people in the early part of 2009 by 2 to 1, to when the bill actually passed 44% of the americans favored it. 47 disapproved of it. today, if you take a look at the average of the polls over the last several months, it's an average of 40% of the american people favor the bill and nearly 50% today don't favor it. it's the only piece of major social legislation that i've seen in modern times that became

less popular after it was passed. >> schieffer: let me get right to it. do you think sarah palin is going to run for president? if she does, do you think she's be a good president? >> i don't know whether she runs or not. she would be a formidable candidate if she does. there will be several geo logical ages that will come and go before the 2012 republican presidential nomination fight gels. it's going to be like the democrats. who at this point in 2006 was saying "it will be that guy obama. he's got it"? i think we're going to face the same process on the republican side where every one of these prospective candidates, if they decide to enter the race, has strengths that he need to work on magnifying and weaknesses that they need to endeavor to overcome or challenges that they need to overcome. you know, we don't know how that is going to play out. it will be a very interesting contest to watch. >> schieffer: you've been very hard on the president. you called him "an utter disaster." can you think of anything good that this president has done?

>> he has continued president bush's policies in iraq by not engaging in a precipitous withdrawal. i think he's done very positive things in some of his education policies by insisting upon standards and by taking on the idea of pay-for-performance with teachers. absolutely. there's things that i think he's done well. in afghanistan, i think he made a courageous decision in afghanistan, much against the hard left base of his party, but the right decision. that doesn't mean that i agree 100% with the decision in afghanistan. i think he's shown too much interest in making that july target a hard date for withdrawal. i think that would be a mistake. >> schieffer: final question. what's going to happen on election night? >> this week, charlie cook, the respected analyst said there were 91 democrat seats up for grabs. stewart rothenberg said 91 up for grabs. politico said 99 seats up for grabs. between 5 and 9 republican seats. there's a very smart academic at american enterprise institute

named henry olsen who said if you look at these wave elections like we're facing, the republicans, or the out party gains about 70% of those seats. that would translate into a gain of 64 to 69 seats in the house. and about 8 or 9 seats in the senate. i think it will be slightly less than that in the house because the democrats have an advantage in money. money doesn't win it for you. we had more money than they did in '06. you have to have sufficiency and adequacy. i think the republicans will get that. the other thing is the intensity. if you look at gallup this week, for example, the republicans maintain a huge advantage. 13 points... excuse me, 11 points in a low turnout... a high turnout election and 17 point advantage in a low turnout election that would look like four years ago. and the intensity maintains itself. >> schieffer: karl rove, always fun to interview. thanks for coming by. we'll be back to get an entirely different point of view in just one minute.

>> schieffer: we're back with the chairman of the democratic congressional campaign committee. he's in minneapolis. the chief strategist for house democrats. congressman, you heard karl rove. he says all this money pouring in is good for what ails you. he says that republicans are just doing what democrats have been doing for a long time. what's your take on that? >> well, bob, karl rove just told you he did not want the voters to know who was spending these tens of millions of dollars essentially to buy a congress that does the bidding of special interests around the country. we had a bill in the house and the senate-- it was called the disclose act. it would require all these different interests, whether left, center or right, to disclose, to tell the voters who they are so that the voters could exercise their own judgment. every republican but one voted against it. in other words, every republican voted to keep the voters in the dark because they knew that when the voters connect the dots and they see the connection between

what these special interests are spending and the special interest agenda that they want to pursue they don't like what they see. >> schieffer: why do you think all this money is pouring in to these groups that are raising money for conservatives and republicans? >> well, it's very clear. what you have is a whole group of big money special interests who had their day. i mean, they ran washington when george bush and dick cheney and karl rove were in the white house with the republican congress. in the last 22 months, their power has been reined in. and they want to get back. let me give you some examples, bob, of what we did. wall street reform. we said we're going to hold the big banks accountable so that no longer are taxpayers left footing the bill for their reckless decisions. big banks didn't like that. big banks didn't like it when we said you're not going to get a big cut of the student loan program. the college student loan program. we're going to give that money directly to students so they can afford college. multi-national corporations didn't like it when we started

to close these perverse loopholes that actually rewarded them when they ship jobs, not goods, overseas. these special interests don't like the fact that their power has been reined in and they're fighting back by spending tens of millions of dollars to try and buy a congress that will do their bidding again. it's as simple as that. that's why karl rove and these groups don't want to tell the voters who they are. because voters are going to figure out that they're trying to punish members of congress who voted to rein them in and they want to buy members of congress who will do their bidding again. >> schieffer: some people say that, when political parties or candidates begin to talk about the other side getting secret donations, it's really the remark of a doomed campaign because they say you're just trying to shift the subject to something else, because you've got a bad economy and you've got a lot of people out of work. i have to say do you think people go to bed at night worried about secret campaign contributions, or are they

worried about whether they're going to have a job tomorrow? >> oh, i think they're worried about whether they're going to have a job tomorrow. i think they would worry about the fact that the folks who ran the show for eight years and drove the economy into the ditch and served the interests of some of these special interests, like insurance companies that saw their profits quadruple during the eight years under the bush administration, they're worried about going back to those kinds of economic policies that helped a few at the expense of the many. look, there's a reason that this group 60-plus, for example, which is funded by the insurance companies, is spending all this money. they would benefit greatly from the republican plan to privatize medicare. and that's just not a theory. that was the alternative republican budget last year that was voted on by john boehner and all the republicans in the leadership. it would cut medicare by 75%, turn it into a voucher program. and essentially turn seniors over to the private insurance industry. that may be very good for the insurance industry.

they would get a windfall. but it would be very bad for seniors. just as the republican plan to privatize social security, which george bush, the other day, said was his biggest piece of unfinished business, would be great for folks on wall street, but it would be terrible for seniors who would have seen huge losses in their social security retirement if that had been in place during the financial meltdown. but, look, these big interests are fighting hard to get back in power. i think the american people are waking up to that fact. that's why i think you're seeing a closing of the political energy gap that's been talked about. >> schieffer: congressman, why do you think it is the president has had such a hard time getting his message across? you say he has a lot to brag about. health care reform. reform of wall street and so forth. but it doesn't seem to be catching on with people. >> well, any time you have this many people who are still out of work, it's tough. but i think what the president is breaking through on is just to remind people that the night

before he was sworn in, we were losing 700,000 jobs every month in this country. now, we're not where you want to be. the pace of the recovery is not where anybody would want to be. but we have seen eight consecutive months of private- sector job growth. why would we go back to a set of economic policies that served these special interests that are now spending all this money because their power has been reined in-- it served the big oil companies. it served the big oil companies and big insurance companies. it served those guys very well at the expense of everybody else. why would we go back to the policies that got us into the mess to begin with? if you look at who would be the chairman of the energy committee if the republicans if the republicans took over, he's the guy who apologized to b.p. when the president wanted to hold b.p. accountable. if you look at the guy who would be the head of the budget committee if the republicans took over, he's the architect of the plan to privatize medicare and social security.

and finally, john boehner, who would be the republican leader, he's the guy that huddled with the wall street lobbyists to kill wall street reform, and now has said that he wants to repeal wall street reform. well, they will be popping the champagne bottles on wall street if these guys get elected. there's no doubt about that. as will all the other big special interests. >> schieffer: very quickly. we have about 20 seconds. what happens on election night? >> i'm confident the democrats are going to retain their majority, because the american people are connecting the dots between these tens of millions of dollars of secret special interest money. when we look under the curtain we're begin to go see who these groups are. the fact that they want to take us back to a day when special interests ran washington. if you look at some of the early.... >> schieffer: got to go. >> the early voting states are showing good news for the democrats. >> schieffer: all right. thank you so much, congressman. back in a second. >> thank you, bob.

>> schieffer: finally today, i went back to new orleans last week one of my very favorite places. you know what? after the worst five years any city could have, new orleans is humming again. the city shared the recession with the rest of us, but for new orleans, that was just the half of it. katrina left 80% of the city underwater. and six months ago, that was book-ended by the worst oil spill ever, which sent its economy for another loop. yet at a conference on innovation sponsored by the daily beast, the city's dynamic new mayor, mitch landrieu told me that while washington was rendered dysfunctional by all the partisan wrangling, his city had no time for such distractions. it had to come together and attack its problems head on. well, here's the news. it is working.

new businesses are starting up faster than the national average. there's still a way to go. but a daring experiment in charter schools already has the educational system in better shape than before the hurricane. facing the highest murder rate in the country, landrieu did the unthinkable and brought in the justice department to investigate his own cops and root out corruption. for now, landrieu wants the rest of the country to hold the applause. there's still too much to do, he says, but he sees his city becoming a lab for innovation that the rest of us can learn from. and here's the best part. in the midst of it, new orleans remains more fun than anyplace i know. the best food, the best music and the best people. check it out. new orleans still knows how to show you a real good time. back in a minute.

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